BOARD00162 ‎(2)‎

• Board Meeting Date: 5/22/2007
• Description: CF Section - New Project Loans - Black Dike Pipeline Company - Black Dike Pipeline Project
• Board Meetings - Doc Type: Memo

Black Dike Pipeline Company
May 14, 2007
Page 4 of 4

Agenda Item 3a

,

estimated cost per acre-foot of water is $11.25 after the first three years to cover the CWCB .
Loan and maintenance costs (estimated at $1,000).

Table 3. Financial Ratios

Without Project With Project
Financial Ratio Previous Years* Future Years
After first 3 years
Operating Ratio (revenue/expense) 100%
I weak: <100% ~ -I average: 100% - 120% 1- I strong: >120%1 N/A (average)
$11.3K/$11.3K
Debt Service Coverage Ratio 100%
(revenues-expenses)/debt service N/A (average)
I weak: <100% 1- I averaQe: 100% - 120% 1- I stronQ: >120%1 $1 0.3K/$1 0.3K
Cash Reserves to Current Expense 182%
I weak: <50% 1- I average: 50% - 100% ,- I strong: >100%1 N/A (strong)
$20.6K/$11.3XK
Annual Operating Cost per Acre-Ft. (1,003 AF) $11.25
I weak: >$20 I-I average: $10 - $20 I-I strong: <$101 N/A (average)
$11.3K/1003AF

* Values are not applicable (N/A) since the Company is new and financial records do not exist.

Collateral: Security for this loan includes: 1) A pledge of the Company's assessment revenues
backed by an assessment covenant; 2) A security interest in the Company's Funding
Agreement, which includes the right to enforce a "step-up" provision in the event of default; and .
3) The Project, including pipeline, diversion structure No. 509 and all associated access
easement rights. This security is in compliance with CWCB Loan Policy #5 (Collateral).

Staff Recommendation

Staff recommends an initial loan, not to exceed $603,980 ($598,000 for project costs and $5,980
for the 1% Loan Service Fee) for engineering and construction costs, to the Black Dike Pipeline
Company from the Severance Tax Trust Fund Perpetual Base Account, for the Black Dike Ditch
Pipeline Project. The staff further recommends a post-construction loan not to exceed $212,980
($207,000 for project costs and $5,980 for the 1 % Loan Service Fee) to the Company with terms
based on a blended rate of 30 years at 2.85% per annum. Security for the loan will be collateral in
compliance with CWCB Loan Policy No.5.

Staff further recommends that final approval of the loan be conditioned upon the following:

1. Executed USDA Conservation Program Co~tract.
2. Company's Funding Agreement shall be executed and include a "step-up" provision.
3. All standard contracting provisions of the CWCB Loan Program including a revised Debt
Service Reserve Fund Provision that requires two annual loan payments (one payment
set aside at the time of first draw of funds and one third of an annual payment set aside
at the time of each of the first three annuallban payments).

Email copy:

Eric Lindgren, President, Black Dike Pipeline Company
Michael Rich, NRCS - Cortez
Marcel Orton, Harward Irrigation Systems, Engineeringffechnical Support
Amy Stengel, AGO

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Attachment: Project Data Sheet